Colombia became the fourth Latin America country this year to take advantage of lower borrowing costs in Europe by selling debt denominated in the single currency, helping push euro bond sales from the region to a record â‚¬10.8 billion in the first quarter.
Colombia sold â‚¬1.35 billion ($1.5 billion) of 10-year bonds to yield 3.875 percent. Thatâ€™s down from initial price talk of 4.125 percent, according to a person familiar with the matter, who asked not to be identified because he isnâ€™t authorized to speak publicly on the matter. Colombia will have the right to call the bond at par at any time after December 2025, three months before the March 2026 maturity date.
Colombian Finance Minister Mauricio Cardenas said last week that he saw a â€œgreat opportunityâ€ in the European bond market, which offered attractive interest rates and liquidity. He visited investors in London and Germany earlier this month ahead of Colombiaâ€™s first euro bond sale since 2001. Yields on benchmark German government notes fell to record lows at the end of February as slowing inflation fueled expectations of expanded central bank stimulus.
â€œTiming is better today than in January or February, which marked the worst start of the year ever,â€ said Lutz Roehmeyer, director at Landesbank Berlin Investment GmbH, who bid for the bonds. â€œWe have a better mood, now as markets went up. We have the ECB out the way and the oil price recovered. The basic factor is desperate hunt for yield in the eurozone, thatâ€™s why they issued in euros instead of dollars.â€
Colombiaâ€™s $1.5 billion of dollar bonds due in January 2026 pay an ask yield of about 4.61 percent, the equivalent of a yield in euros of 2.71 percent.
Colombia follows other Latin American countries taking advantage of reduced borrowing costs resulting from European Central Bank bond purchases, with a combined 4.7 billion euros in sales by Chile, Mexico, and Peru.